Linden Lab hands down Second Life metrics for Q1 2010

Today, Linden Lab is releasing the quarterly metrics for Second Life, showing overall performance for Q1 2010, and contrasting that with the performance of previous quarters.

Linden Lab claims that Q1 2010 was an all-time high for the Second Life economy. We'll drill down through the metrics and see if that's so.

The economy

First up, Linden Lab used to make a ton of well-reasoned arguments as to why user-to-user transactions didn't constitute a valid economic metric. This was particularly noticeable in quarters where user-to-user transactions had slumped.

More recently, however, Linden Lab has been beating the drum for this particular figure, and for this quarter particularly, it takes pains to present it as a valid and meaningful economic measurement. We'll let the reversal in position slide, and take the Lab's arguments in favor of user-to-user transactions as a valid metric at face-value.

As you can see, user-to-user transactions rose about 4% (or US$7 million) against the previous quarter (Q4 2009).

Web shopping portal Xstreet rose approximately 21% over the previous quarter, but that only amounted to about US$400,000. Xstreet still represents less than 1.5% of Second Life economic activity if we take user-to-user transactions as a guide. Xstreet is gaining very little ground compared to the overall economy each quarter.

Trading on the Lindex jumped 5% to US$31 million, after a mostly lousy 2009, however sales of Linden Dollars dropped significantly, indicating a lack of growth in the overall value of available goods and services (or, what most people would call, the economy).

Under ideal conditions the Supply Linden mechanism creates new currency according to certain demand criteria, which matches the monetary supply to the overall value of goods and services in the economy. This has the side-effect of implementing the Principle of Stable Economy and preventing significant inflation or deflation in Linden Dollar exchange rates and in-world pricing, whilst also earning the Lab a fair bit of additional revenue.

Sales of new currency were down 58% from the previous quarter and have been declining for two straight quarters now. Supply Linden's sales for the last quarter look like hand-picked, rather than organic figures however, so it may not be as indicative of a slowing of the Second Life economy as it is of somebody's thumb on the scales.

Why the brakes seem to be being put on this process, however, is open to interpretation. It could be related to a rise in the amount of stipends being paid, but there really isn't enough information to speculate usefully.

Overall, the number of accounts participating in the economy (that transferred Linden Dollars to another account, or received them) rose in line with the pattern of the last two years, finishing at 517,349 accounts, compared to Q4's finish at about 488,000.

The amount of currency held by user-accounts remained flat compared to the previous quarter at 6.9 billion Linden Dollars.

Coupled with the reduction in Supply Linden sales, the overall picture is that the Second Life economy experienced no statistically significant growth during Q1 2010, insofar as an increase in the overall value of available goods and services are concerned. At least, none that can be determined from the published information.

Curiously, during Q1, the difference in growth of new regions owned by Linden Lab (52) almost exactly matched the difference in new regions owned by users (55). Quite what that means, we're not certain, but we don't much believe in coincidences. The number of Linden-owned regions actually shrunk (by 16) in Q4 2009. We're not quite sure what that means either.

Users

The average number of monthly users with repeat logins (accounts that logged in more than once during the calendar month) rose 5.24% from Q4 to Q1, finishing at 826,214 users in March.

Linden Lab attributes this to an increased (ie: non-zero, for a change) advertising presence and an increase in interest off the back of the movie Avatar.

User hours picked up again, topping out at 116 million for the quarter, but still short of the 126 million hours record in Q2 2009. This reverses a two-quarter decline in user-hours.

Peak concurrent users rose 5% to 81,156 during Q1, which itself isn't a very useful figure. Peak concurrency is more important in terms of service stability, and it's how various services measure their respective e-peens, but isn't really that indicative of growth or decline of usage so much.

Median concurrency is a more useful figure for that, and there we see a 4% increase (or 2,175 concurrent users) from Q4 to Q1, which is a very good result.

Now that the user-hours and concurrency are heading upward again, there's no sign of the usage-bands data for the quarter this time around.

And the rest

Voice minutes have been the subject of numerous conflicting definitions at the Lab, depending on who you talked to. The current measure is "Counted when a Second Life client is connected to any kind of voice channel, but not necessarily speaking" – as long as it is a voice-call, or if voice is on, and there's anyone making any sound in the vicinity that might be heard.

That yields a fairly wibbly-wobbly sort of number, as voice is enabled in the viewer by default, whether or not you're intending to speak or to listen. Voice minutes, therefore, would accrue from users who are not set up for either, and even who are not aware of it.

Unsurprisingly, the number of voice minutes has hit a new record reaching 3.2 billion minutes, 3% up from Q4 2009. How many of those minutes come from actual voice users is unknown.

Hours lost to downtime was up 22% (to 0.22% or roughly 25.5 million lost user hours) on the previous quarter, much of it due to planned upgrades, maintenance work and server relocations.

In closing, it looks like a solid quarter for Second Life, and for Linden Lab – but not, it must be said, for the Second Life economy. If there's data that shows statistically significant growth in the Second Life economy, it isn't a part of what the Lab is publishing today.

	Are you a part of the most widely-known collaborative virtual environment or keeping a close eye on it? Massively's Second Life coverage keeps you in the loop.